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TJX Companies Draw Attention: 3 Factors Working in Favor

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The TJX Companies, Inc. (TJX - Free Report) is gaining from strong merchandising and brand strategies combined with effective marketing efforts. Also, the company continued reporting positive comparable store sales (comps), buoyed by robust initiatives to attract traffic. These factors along with the company’s off-price model, strategic store locations and impressive brands have been driving its store and online performance.

All these efforts not only helped the company to deliver robust second-quarter fiscal 2019 results but also helped the stock to outpace the industry in the past three months. Shares of this Framingham, MA-based company have rallied approximately 16%, outperforming the industry’s and S&P 500 index’s growth of 10.6% and 6.7%, respectively.



We have highlighted three reasons why this Zacks Rank #2 (Buy) stock with a Growth Score of A is a solid bet.

Solid Comps: A Key Catalyst

TJX Companies has been reporting impressive comps run for a while now. During the second quarter of fiscal 2019, consolidated comps grew 6% year over year driven by increased consumer traffic at all segments, especially the Marmaxx division, and strong merchandising policies. Notably, the second quarter marked the 16th straight period of higher customer traffic for both Marmaxx and the company as a whole. In fact, all segments reported increased comps, courtesy of consumers’ favorable response to the company’s brands and impressive merchandise assortments at reasonable prices. Comps rose 3%, 6%, 4% and 7% at HomeGoods, TJX Canada, TJX International and Marmaxx segments, respectively. That said, management now expects comps growth of 3-4% for fiscal 2019.

Robust Q2 Results & Upbeat View

The company has been witnessing top and bottom line growth year over year for more than a year now. Notably, it has been gaining from solid customer traffic, which continued to boost TJX Companies in the second quarter, wherein both earnings and revenues improved year over year and beat the Zacks Consensus Estimate for the third straight time. Sturdy performance along with its constant sales-driving efforts and expected market share gains prompted management to raise earnings and comps views. For fiscal 2019, management projects adjusted earnings in the range of $4.10-$4.14 per share, representing 6-8% increase from the year-ago period. Earlier, the company expected bottom-line growth in the band of $4.04-$4.10.

Store, E-commerce & Other Efforts on Track

TJX Companies has an aggressive store-opening strategy. The company regularly opens stores and steadily expands across the United States, Europe and Canada. In the second quarter, the company added around 53 stores. Further, with increasing number of consumers resorting to online shopping, the company has undertaken several initiatives to increase online sales and strengthen its e-commerce business. Also, TJX Companies remains committed toward boosting comps growth, through effective marketing initiatives and loyalty programs. Incidentally, the company’s aggressive marketing and advertising campaigns through multiple mediums have been improving traffic at its stores.

3 Stocks to Watch
 
Boot Barn Holdings (BOOT - Free Report) pulled off an average positive earnings surprise of 31.8% in the trailing four quarters. It has a long-term earnings growth rate of 23% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Burlington Stores, Inc. (BURL - Free Report) delivered an average positive earnings surprise of 11.4% in the trailing four quarters. The company has a Zacks Rank #2.

Ross Stores, Inc. (ROST - Free Report) came up with an average positive earnings surprise of 5.1% in the trailing four quarters. It has a long-term earnings growth rate of 10% and a Zacks Rank of 2.

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